Question 61

An increase in taxes imposed on the production of motorcycles will result in a decrease in the supply of motorcycles.

When taxes on the production of motorcycles increase, manufacturers face higher costs, which can lead to a reduction in the quantity of motorcycles they are willing or able to supply to the market.

A) An increase in the number of people aged between 18 years and 40 years riding motorcycles

This option suggests a rise in demand rather than a change in supply. An increase in the number of riders in this age group would likely lead to an increase in the demand for motorcycles, which does not directly affect the supply side of the market.

B) An increase in taxes imposed on the production of motorcycles

This is the correct option, as higher taxes on production increase the overall costs for manufacturers. Consequently, this can lead to a decrease in the supply of motorcycles since producers may reduce output or exit the market due to lower profit margins.

C) A decrease in the price of motorcycle tires

A decrease in the price of motorcycle tires would generally lower production costs for manufacturers, potentially leading to an increase in the supply of motorcycles rather than a decrease. Therefore, this option does not align with a reduction in supply.

D) A technological improvement reducing the costs of producing motorcycles

This option indicates a scenario where advancements in technology lower production costs, making it easier for manufacturers to produce more motorcycles. Such improvements typically result in an increase in supply, contradicting the premise of a decrease.

Conclusion

The correct answer is B, as an increase in production taxes directly impacts manufacturers' costs, leading to a decrease in supply. All other options either do not directly influence supply or suggest conditions that would increase supply rather than decrease it, reinforcing the notion that tax increases are a critical factor in supply reduction.